‘Business as usual’ as Worldcom files biggest ever bankruptcy

WorldCom, the US telecoms giant, became the biggest bankrupt in history today, but the company’s chief executive said it would have no effect on the company’s customers.

‘‘At the end of the day, this really will be business as usual,’’ said chief executive John Sidgmore.

The Mississippi-based firm filed for protection under the Chapter 11 bankruptcy laws nearly four weeks after admitting hiding £2.5 billion in expenses through deceptive accounting.

With £67.8 billion in assets reported in its filing, WorldCom’s bankruptcy was nearly twice as large as energy mogul Enron’s last year.

A spokeswoman for WorldCom’s UK operations said there were no redundancies expected in Britain following today’s announcement.

‘‘The announcement hasn’t outlined any impact on jobs in the US, but it is business as usual in Europe, including the UK.’’

She said the group had announced around 200 redundancies before the accounting irregularities emerged.

She said morale had been ‘‘surprisingly good’’ among staff.

The group, which employs 8,300 staff in Europe out of 60,000 worldwide, has its UK head office in Reading.

The bankruptcy, the latest in a stunning series of corporate collapses, had been expected.

‘‘We do not think that there will be any significant impact on the employees and vendors, for that matter, and we should have plenty of cash to make it,’’ Sidgmore said.

Michael Powell, chairman of the Federal Communications Commission, agreed, saying he believed the bankruptcy would not lead to ‘‘an immediate disruption of service to consumers or threaten the operation of WorldCom’s Internet backbone facilities’’.

But the move threatens to scare off anxious customers who have been approaching WorldCom’s main rivals - Sprint, AT&T and SBC Communications - since news of the accounting scandal broke.

Sidgmore said his company had negotiated about £1.3 billion in financing while it reorganises. The company, which is hiring a restructuring team to ease the process, hopes to emerge from bankruptcy in 12 months.

Drake Johnstone, a telecoms analyst with Davenport in Richmond, Virginia, said the hope among the banks providing the new money is that WorldCom will be able to restructure its debt and emerge as a viable enterprise.

‘‘My concern with that scenario is it is unclear what other surprises WorldCom has in store,’’ he said.

‘‘The internal audit is not complete. At this point we do not know how much revenue or cash flow the company has.’’

The deceptive accounting, investigations and collapse of WorldCom follow costly scandals at other big name companies, including Adelphia Communications, Global Crossing and Enron, all of which have filed for bankruptcy protection as they attempt to pay creditors and reorganise their businesses.

Sidgmore said WorldCom is cooperating with investigators to ‘‘help them find the bad guys, punish the bad guys and leave the company alone’’.

WorldCom admitted on June 25 that it falsely accounted for £2.5 billion in expenses, which had the effect of inflating profits.

That same day, it fired chief financial officer Scott Sullivan, who was subsequently accused by the company’s auditor, Arthur Andersen, of withholding crucial information about WorldCom’s bookkeeping.